Based on my experience, it seems that a lot of tenants do not even know this exists! So, I decided to speak with an expert to help businesses understand what money is available for them to relocate. Ann Kayman the CEO of New York Grant Company was a recent guest on Conversations with Cohen.
We worked together recently helping a client of mine move to the Financial District from Midtown. This resulted in a $100,000 rent credit over five years, as well as an electricity credit of more than $25,000. With companies watching their dollars and cents now more than ever, I thought this was a great opportunity to educate businesses about incentives that exist for relocation.
New York will pay you to move here!
There is a lot of misinformation or lack of information, and people just are not aware that incentives exist for private businesses to come into New York City (of all places!) and to move within the city. Most would not think that there are grants and credits available. Costs for rent and taxes are so high in New York City, so it is a rather unexpected phenomenon that businesses can realize bottom-line benefits if they just know where to look.
A robust program
Ann states that the programs that exist in New York are like many that are across the country. Each jurisdiction in the country, across city, state, county, and local governments, would have various economic incentive programs. They are very similar in a lot of cases, because governments have certain tools which they can use to help provide stimulus, or incentives, to the public. Competition then ensues. New Jersey will compete with New York, and New York will compete with California, and so on. So, what we have in New York is a very robust program.
You can combine incentives
To simplify, there are programs that are available from local state governments where some financial benefit will be reaped by deciding to relocate to a certain area. The state has its own level of programs. The city governments have their own programs, and the counties have their own programs in New York. We have a series of industrial development agencies, IDAs, and these are county-level organizations that provide additional benefits. And they are all, with very few exceptions, cumulative.
They add to each other; they do not conflict. You can bundle them all together. And because of the way funding works on the government side, you can have any combination of things, like outright cash grants which is money that you do not have to ever give back.
Tax (and utility cost) breaks
You also have tax breaks of various kinds. You could eliminate taxes, reduce taxes, or defer taxes. Ann says that she always likes to say to her audiences, “that which is taxed, can be untaxed”. And that is one of the best things that New York can do for the business community, which is to alleviate, relieve, defer in any way, or get rid of tax burdens that businesses face. And that could be a business income tax, sales tax, real estate tax, basically, any kind of tax can be effectively untaxed.
In addition, governments can give loans or maybe loan guarantees to banks so that they free up credit. Governments can also partner with utility companies and this is done in New York all the time with utilities including Con Ed, PSE&G, or National Grid, to reduce the cost of electricity, or gas, or both. Ann says that that helps her get the clients she works with a break on what are otherwise high utility costs in the state of New York.
Does this apply to my company?
Ann and I came up with a hypothetical company as an example. Based in Des Moines, Iowa, this company has 20 employees and comes to New York for 5,000 square feet on Wall Street. They rent for five years and they take an option to renew.
If the building is pre-1975, which most of the office buildings on Wall Street are, then that client will get $50,000 in rent credits over the next five years. They could get five years or more of electricity discounts, worth about a 15% savings of what they would otherwise have to pay in electricity costs, depending on the building. And, if they are planning to increase their headcount, they could get job credits from the state of New York because they are coming in from out-of-state to New York City for the first time. Essentially, they could get $60,000 a year over the next 12 years! Let me be clear there are lots of incentives and you do not have to move from out of state for it to count!
Sign me up!
If you have read this far and you think this is for you, go ahead and listen to my entire interview with Ann, as she is a wealth of knowledge on all the programs that are available for relocation. Then, I would recommend getting in touch with both a real estate advisor (that’s me!) and Ann, to get the process rolling. And rolling smoothly. These programs have very strict deadlines, qualifications, paperwork requirements, and technical requirements that often trip people up. It is not up to you to navigate this stuff; that is what Ann and I do.
We have been doing this for a long time and still must look up the rules all the time as they are currently being updated. Ann and her team spend all day doing this stuff as a specialty. And they must dig in and ask for clarification and make sure that they are up to date on the latest rules and interpretations, and make sure that everything gets submitted perfectly.